The courier, express, and postal industry is the largest segment of the transportation marketplace worldwide. This blog will provide a personal perspective on the challenges faced by firms in the industry as they serve an increasingly competitive market.

Sunday, June 26, 2011

The Issa/Ross Postal Reform Bill presents a future for the Postal Service and stakeholders that serves the interests of two of the Postal Service's creditors: the Office of Personnel Management, to whom the Postal Service currently must make payments for retiree benefits and the Department of Labor, which administers workers compensation programs. The bill forces changes in Postal Service operations, labor contracts, and rates all designed to ensure that those payments are made according to the schedules currently in law.

If the Issa/Ross Postal Reform Bill is signed into law, the Office of Personnel Management and the Department of Labor face minimal risk that the Postal Service will not pay them. For the Office of Personnel Management and the Department of Labor this is a good bill, as they will likely get 100% of what the law now states they are owned regardless of what happens to the Postal Service and postal market once the obligations to them are paid.

The Issa/Ross Postal Reform bill does not leave the Federal government as a creditor off the hook. By expanding the Postal Service's borrowing authority by $10 billion, the bill increases the risk facing the Department of the Treasury. Given the losses and cash needs of the Postal Service, by 2020, the Department of the Treasury will then hold $25 billion in Postal Service debt with no clear indication as to whether demand for Postal Service's products will give it the revenue needed to pay off that debt.

By increasing the debt held by the Department of the Treasury, the Issa/Ross Postal Reform bill creates a conflict between two of the largest creditors (i.e. the Office of Personnel Management and the Department of Labor) and other large creditor, the Department of the Treasury. This bill should force the Department of Treasury to become more involved in postal reform policy as repayment of Postal Service debt requires either a business plan that creates a financially viable Postal Service or a plan to liquidate assets as the delivery and other services of the Postal Service are wound down over time.

By focusing on meeting the needs of two of the creditors, the Issa/Ross downplays the federal government's ownership role as it relates to the Postal Service. By ignoring the ownership role, the bill has little interest in maintaining the value of the enterprise so that it can thrive as either a government entity or private corporation.

Finally, the Issa/Ross develops postal policy that takes the Postal Service in a different direction than nearly every other government has taken then national postal operator. In most of the world, the national postal operators have been put on a path involving corporatization and eventually privatization. In these countries, the goal is to ensure that there is a postal operator that can operate as a viable business that can attract private debt and possibly equity investors as the best way to develop the digital and physical communications delivery infrastructure as well as a parcel delivery infrastructure necessary for the growth of on-line and mobile retail sales.

Instead, the Issa/Ross bill takes the Postal Service in the opposite direction. Over time the Postal Service will increasingly look more like any other United States government entity and less like the businesses that handle other parts of the print and parcel delivery supply chains or the enterprises that run the national posts outside of the United States.

9 comments:

Anonymous
said...

The USPS does NOT want their borrowing limit raised. The only positive thing in the ISSA bill is to allow 5 day delivery. The rest is crap. Give the USPS back the 75 billion they have been forced to overpay the CSRS retirement funds, and the 6.9 Billion they have been forced to overpay the FERS retirement funds. Restructure these funds to a proper monthly amount and do away with Saturday delivery. This fix is so easy but Congress has spent the over paid retirement funds just like they have robbed SSAN. The USPS has been begging for over 18 months to do these things. If done the USPS is solvent for many more years down the road.

Get rid of the Unions........that's all that Issa/Ross want. Pandering to their ultra-Right wing supporters, they don't care if the USPS is left a gutted smoking wreck. As long as the Unions are busted, they can claim Victory!! for their ignorant followers.............

Anonymous is totally and completely correct? 5 day delivery is not an answer(carriers 2 days off, yes will work) used to be 7 days and soon after will be 3 day delivery. Saturdays mail has to be delivered(most holidays on monday what if snowstorm thursday friday) Lots of meds now go thru the mail, can we wait and wait? parcels as well(packages are plus plus in volume). Kids birthdays presents lingering. Just adjust routes so two merge on Saturday and closed companies are out and homes still get mail. Going down to PO isn't best for our elderly either.

Who are the morons that sat on their asses and ALLOWED the USPS to overpay to this extent? Why didn't they raise a red flag YEARS ago? We surely didn't overpay 75 billion in only 18 months. We have all of these people that don't touch the mail and they are just now figuring this out? What do these people do? Allowing these people to continue running the USPS is not the road to solvency.

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Blog Author

Alan Robinson is the President of the Direct Communications Group and an associate of Analytic Business Services (AnaBus). He has over twenty years experience helping firms and government officials deal with the regulatory, policy, marketing, and management issues associated with changes in competition within transportation, parcel delivery and postal markets.
He can be reached at alan.robinson@directcomgroup.com